Certificated employees' retirement benefits consist of three plans:
TCRS Retirement Plan (a defined benefit plan)
State of Tennessee 401(k) Deferred Compensation Plan (a defined contribution plan)
State of Tennessee 457 Plan (a defined contribution plan)
TCRS retirement plan
MNPS is a member of the Tennessee Consolidated Retirement System (TCRS), which is a trust fund established by the Tennessee General Assembly for the purpose of administering a retirement program for public employees.
Teachers contribute 5% of salary toward the cost of the plan; MNPS pays any additional costs. Participants become vested after five years of service in TCRS. Vesting means you have a right to a guaranteed retirement benefit when age/service requirements are met.
Benefits paid at the time of retirement are based on your years of service times a percentage of your pay (based on your highest five consecutive years of service). Those hired before July 1, 2014, are in the Legacy Plan, and the pay percentage is 1.5%. Those hired on or after July 1, 2014, are in the Hybrid Plan, and the pay percentage is 1%.
The Tennessee 401(k) Deferred Compensation Plan is operated by the Tennessee Department of Treasury and administered by Empower Retirement.
For certificated employees hired prior to July 1, 2014 (Legacy Plan members), participation in the 401(k) is voluntary; you must take action to enroll.
For those hired on or after July 1, 2014 (Hybrid Plan members), the 401(k) plan is part of the Hybrid Plan. Newly eligible employees are automatically enrolled at a 2% contribution rate, and the district contributes 5% of pay to participants’ 401(k) accounts. Employees may increase or discontinue their contributions at any time.
The 401(k) plan allows an employee to defer up to $19,500 in compensation in 2020 (indexed annually for inflation). Additionally, if you are over age 50, you may be entitled to make catch-up contributions to the plan. Both pre-tax and after-tax (Roth) options are available. The 401(k) has multiple investment options.
In addition to the 401(k) plan, MNPS employees may also participate in a 457 plan. A 457(b) deferred compensation plan is a tax-advantaged employee retirement plan offered by state and local public (and some non-profit) employers. A 457 is similar to a 401(k) plan in that it lets you set aside pre-tax money for later use. Contributions and their earnings are not taxed until money is withdrawn.
For people interested in maxing out their savings potential, having both the 401(k) and 457 plans available essentially doubles it: You can contribute up to $19,500 in each plan. Additionally, if you are over age 50, you may be entitled to make catch-up contributions to the plan.
Another advantage of the 457 is that upon separation of service, the 10% early withdrawal penalty (that 401(k) plans have) does not apply. So if you retire early, you can withdraw that money before age 59½ without penalty.
Employees who are vested in the TCRS retirement plan have these retirement options.
An unreduced benefit is payable to employees who reach age 60 with vesting rights or completed 30 years of creditable service at any age.
A reduced benefit is payable to employees who retire prior to attaining the requirements for a full-service benefit. To be eligible for early retirement, you must be at least age 55 and have 10 years of creditable service OR have at least 25 years of creditable service.
TCRS provides disability benefits for members who become disabled prior to meeting service retirement requirements. There are two types of disability: ordinary and accidental.
Ordinary disability benefits
To qualify for ordinary disability benefits (a disability because of medical reasons), you must have at least five years of service, be unable to engage in any gainful employment and be approved by the TCRS medical panel. After approval, you are subject to periodic re-evaluations until you reach age 60.
Accidental disability benefits
To qualify for accidental disability benefits, your disability must be the direct result of an on-the-job injury that renders you unable to engage in any gainful employment. There are no minimum service requirements; however, you must be approved by the TCRS medical panel. The disability must be documented to your last paid day of service, and you must apply within one year of your last paid date or within two years of the injury. After approval, you are subject to periodic evaluations until you reach age 60.